Pages

Are you not looking forward to May 1, when the Real Estate (Regulation & Development) Act, 2016, is scheduled to come into effect? We all have read volumes about how the law will reform the sector in such a way that fraudulent developers will become a thing of the past. There will be no scope for wrongdoings and duplicity in the sector. All fair points. But all this will be achieved not only by fixing responsibilities of developers and real estate agents; home buyers will be made equally accountable. They, too, will have to ensure they honour their part of the deal.

Here are five points for you to consider if you planning to start a home purchase after the new law comes into force:

While a developer will be responsible for providing you all the detail, keep you updated about the progress and deliver a project within a stipulated time limit, buyers will be responsible “to make necessary payments in the manner and within the time as specified in the said agreement for sale”. You will also be liable to pay your share of the REGISTRATION charges, municipal taxes, water and electricity charges, MAINTENANCE CHARGES, ground rent, and other charges, if any.

Now, what if you fail to do so?

You will have to pay an interest -- the benchmark would be the prime lending rate of the State Bank of India, plus two per cent additional charges-- for any delay in payment.

Is there a way to avoid paying this penalty? Sure, if you can negotiate a deal with the developer. “The obligations of the ALLOTTEE under sub-section (6) and the liability towards interest under sub-section may be reduced when mutually agreed to between the promoter and such allottee,” says the Act.

The Act specifies that a home buyer has to take possession of a unit two months after an occupancy certificate has been issued for the same. If you fail to do that because of an unforeseen situation, it would be considered dishonouring the sale agreement.

If you thought the registration of the conveyance DEED of the apartment happens to be the sole responsibility of the developer, you are wrong. The law mandates that you participate in the activity.

Your responsibility does not end after you settle in your individual home. "Every allottee of the apartment, plot or building as the case may be, shall participate towards the formation of an association or society or cooperative society of the allottees, or a federation of the same," says the Act. Even if you are not socially active, becoming a member of the housing society will now be your responsibility.

India Real Estate: The Impact of Transit-Oriented Development

TOD has the power to transform the future of Indian cities

Today, the scale of urbanization in India is only 33%, whereas the size of the urban population is about 429 million – much larger than that of many other countries, according to World Bank data.

The fact that Indian cities are among the fastest-growing in the world is clearly evident from JLL’s recent Cities Momentum Index 2017 – a research report which identifies the world’s 30 most dynamic cities. 6 out of 30 cities, namely Bangalore, Hyderabad, Pune, Chennai, Delhi and Mumbai, are in India.

Though it is an indicator of positive development, rapid urbanization is also accompanied by a host of challenges.

The growing urban sprawl in India is leading to increased use of private vehicles, congested roads, increased pollution, public safety issues, increased household spending – and the stress that increasing population puts on the existing infrastructure of our cities.

Many of these problems can be solved or at least significantly reduced by cities augmenting their public transport systems and also integrating land use planning and development with the transport network.

Such solutions can lead to markedly improved infrastructure efficiency – and a better quality of life for citizens.

Transit Oriented Development (TOD)

After focused efforts to dovetail infrastructure and technology through its AMRUT and Smart Cities programs, the Government of India is now turning its attention to developing a Transit Oriented Development (TOD) policy to support the transformation process already underway in most of the Indian cities.

This transformation will attract lot of investments to the respective cities, and vastly increase their ‘livability’ in a sustainable manner.

Essentially, TOD is any macro or micro development focused around a transit node which results in improved ease of access to the transit facility.

When done correctly, such developments encourage citizens to prefer walking and using public transportation over using private vehicles.

Globally, cities like Singapore and Hong Kong in Asia, Curitiba in Brazil, Stockholm in Sweden and Washington DC in the US have TOD as an integral element in their master planning, and integrated with their mass transport networks.

The success and inherent inducements for growth that TOD delivers in these cities is remarkable. Around 26 to 30% of these countries’ populations – and the majority of their job centres – are along Metro corridors.

The TOD trend is now gradually making its mark in India, as well. Cities like Delhi, Ahmedabad, Mumbai and Chennai now have extensive high-order transit options either in place or in the planning stage.

It is safe to state that TOD will be the future of urbanization, and that it will have a major impact on various sectors – not least of all the real estate industry.

Direct and Indirect Benefits of Transit-Oriented Development

Releases under-utilized urban lands:

The major reasons for urban sprawl and shortage of urban land is the fact that urban lands are not exploited to their optimal potential.

TOD opens up dense developments near transit nodes through relaxed FSI norms, thereby increasing the developable area in the same piece of land.

Ensures sustainable urban growth:

TOD curtails urban sprawl and hence reduces the strain on existing infrastructure. This helps in achieving compact and controlled developments within the cities, and reduces the average travel time and household spends on transportation.

Increased modal shift towards Non-Motorized Transport (NMT):

Done correctly, TOD creates a balanced mix of land use through concentrated residential development at a walking distance of 500 to 800 m along the transit corridor, or from the transit station.

This increases ‘walkability’, encourages public transport use and also makes ‘last-mile’ options such as cycle sharing systems much more viable.

Increased financial viability of transit investments:

Increase in the modal shift increases the ridership (the number of passengers using a particular form of public transport) by improving access to transit stations through seamless connectivity.

This enhances the economic and financial viability of transit investments. It also helps in better channelling of peak hour traffic along both directions, improving the efficiency of existing vehicle fleets.

Improved quality of life with better places to live, work and play:

Factors such as increased walkability, reduced traffic congestion and shorter commutes result in more leisure hours, reduced pollution, more reliable and safer public transport systems, mixed-use development, and efficient and shared open spaces.

All these add up to significantly improved quality of life for citizens.

Efficient management of infrastructure spending:

In a city, a lot of infrastructure investments are often planned for the fringe areas owing to the urban sprawl and lack of infrastructure facilities.

Infrastructure spends also need to be concentrated to benefit the core cities; it costs less to build roads/ expressways and other physical infrastructure for the urban sprawl. Also, transit options are first developed within city limits and later scaled to outer areas.

Effectively optimizing these spends within the city limits is critically important, and is the perfect solution. Also, TOD exploits available urban lands to the maximum, thereby making enough space available to meet the growing demand for affordable housing.

Increased availability of EWS housing:

TOD increases housing availability, and mandatory caps for the construction of EWS housing also indirectly helps increase in the supply of such housing.

Expanded economic opportunities and public safety:

This is especially true for women, who prefer to travel shorter distances to work in India. Many Indian cities are now working on improving general public safety and particularly reducing crimes against women.

Commercial activity (hawkers, shops) at street levels on major walkways and other commuting paths create safer neighbourhoods by facilitating more ‘eyes on the street’.

TOD also impact and change the dynamics of commercial real estate to a great extent. Increased FSI along transit corridors or 500 m to 800 m near the transit station will result in increased land cost by about 10-15%, projected to be about 1.6 to 1.7 times the existing GLV (Guide Line Value).

The demand for retail or commercial spaces along the corridor increases on the back of improved accessibility, while residential demand also increases due to maximized employment opportunities, reduced commuting times and costs, etc.

TOD not only significantly alleviates residents’ daily commuting hassles, but also brings the collateral benefit of boosting property prices via the premium placed on residential premises situated close to the public transit system like MRT and BRT), since there are immense savings in terms of reduced time and cost.

The rentals of the residential units also increase significantly, as more people will want to live near Metro stations to benefit from faster and cheaper transport. If the feeder service is strengthened, this impact will expand the influence zone to 4-5 km from Metro stations.

To summarize

In short, TOD is literally the last lap to achieve sustainable urban transformation in amalgamation with various initiatives and concepts such as Smart Cities, AMRUT, NMT, MMI (Multi-Modal Integration), Last Mile Connectivity options, Green Mobility Schemes, etc.

It makes walking more viable to live, work and play rather than using private modes of transport. As the indubitable future of urbanization in India, TOD requires dedicated fund allocations from Governments (depending on the size and positioning of the city) for its effective implementation.

Wave pools and sandal-free zones, barbeque decks, housekeeping, multi-cuisine restaurants and a concierge — these are some of the features of what is emerging as a new segment in luxury real-estate: Resort weekend homes.Gated communities coming up on the outskirts of India’s metros are positioning themselves as resort complexes that you can buy into.“The concept has evolved tremendously, around the world and recently in India,” says Ashwinder Raj Singh, CEO for Residential Services at JLL India. “The second homes market per se is not doing too well currently. Generic luxury offerings have become quite commonplace. So, well-defined luxury offerings are aiming at HNIs, who expect the best that money can buy.”

TUNING OUTHere’s what’s on offer then. Lodha’s Belmondo project in Pune has a 50,000-sq-ft clubhouse and a spa; Purvankara’s Purva Palm Beach project in Bengaluru has a faux rainforest compete with artificial waterfall atop the clubhouse, infinity pool below, and a lush no-footwear zone paved with pebbles and river sand; Raheja’s Exotica project at Madh Island has restaurants and housekeeping and laundry services; villas at Mantri Euphoria in Pune and Isprava’s Villa Lante project in Goa come with their own private pools.“The weekend home or second home concept has been around for a long time, but in recent times there is a distinct shift towards having an exclusive space where one can get away from the urban strain and indulge themselves over the weekend,” says Prashant Bindal, chief sales officer of Lodha Group. “Growing disposable incomes and the aspiration to live a hassle-free life are fuelling the demand for such second homes.”The resort feel extends into the living spaces too.“People investing in luxury weekend homes are looking at more opening up of spaces, larger bathrooms, landscaping for outdoors,” says Mumbai-based interior designer Shabnam Gupta. “It’s not like going to a farmhouse on the weekends. The upper middle classes expect the kind of luxury ambience that used to be associated mainly with the rich and the famous, because they too see themselves as people who divide their time equally between working hard and partying hard.”Most of this target group is also widely travelled and exposed to good living and good space design, and they want their weekend homes to meet those standards – with multiple water elements, yoga facilities, open-air bathrooms etc, Gupta adds.says Kamini Shah, a 48-year-old textile designer from Mumbai who paid Rs 2 crore in 2012 for her three-bedroom bungalow in the Prakruti Resorts project at Kashid.“It’s pure bliss to get away to a ‘taken care of weekend home’ where all I have to do is put my feet up and relax, and maybe entertain over the weekend with no stress on what to do, where to go.”“The best part about my weekend home is that I don’t have to bother about cleaning up or stocking up on supplies for the stay. The facility management team takes care of everything,” says Shah, adding that it does come at a cost – which is Rs 15,000 per month.“Homes in such projects obviously cost a lot more than the average luxury second home, because the associated facilities call for higher maintenance and more staff. However, for those with the appetite for such offerings, the price is worth it if the project truly meets their expectations,” says Singh of JLL.

After May 1, when the Real Estate Regulatory Authority (RERA) is in place, the realty sector will likely see an uptrend with slight price correction, say industry players and stakeholders.

This is likely as genuine buyers may pitch in on the back of an improved consumer climate and lower home loan rates.

"Considering the present scenario, the next three-four months are like the gestation period for the realty sector and after six months the sector is likely to gain momentum. We are hoping to see positive impact in the second half of 2017 itself after RERA comes into full effect," real estate advisory firm PropUrban Founder and CEO Mir Jaffer Ali told IANS.

According to the Real Estate (Regulation and Development) Act, 2016, which came into effect on May 1 last year, every state is supposed to have a RERA in a year's time.

It will thereon become mandatory for all real estate projects, commercial and residential, to register with RERA for transparent execution.

"At a time when the setting up of a Real Estate Regulatory Authority in each state is set to bring in increased accountability in the markets, we can expect to witness some amount of correction in real estate prices in markets," property consultant Cushman & Wakefield Managing Director (India) Anshul Jain told IANS.

Ali concurred and said that the cash component in property transactions will see a significant drop, resulting in a fall in land prices, which could be anywhere between 15 and 20 per cent at some places.

On a positive note, almost all banks have also lowered the home loan interest rates post demonetisation which would automatically generate more demand for housing with the sops given to affordable housing in this year's Union Budget being an added advantage.

The start of 2017 has seen buyer sentiment improve and the anticipation is that with a positive electoral result and encouraging budgetary reforms, the sector should perform better over the course of the year.

Large developers such as the Lodha Group have seen sales of 850 units in February 2017, which indicates a gradual upward trend in consumer sentiment across the segment.

More so, with the dust of demonetisation finally settling, buyers' sentiments are looking positive in anticipation of higher transparency and efficiency. Genuine requirement for homes coupled with reduced interest on home loans can be attributed to this.

According to a survey by PropUrban, once RERA is fully in place, about 45 per cent respondents would be investing within the next six months, while another 26 per cent are likely to take the plunge within a year.

"Interestingly, now the market will see the return of 'real buyers'. As for the RERA and Benami Amendment Act, the sector is likely to see positive impact in the short-term -- within one-two years," Ali said.

Moreover, with the deadline of implementing RERA fast approaching, developers are trying to focus on completing their existing projects rather than launching new ones, which is good for the sector and buyers, he added.

With RERA, there would be mandatory disclosure of project details, including those of the promoter, project, land status and clearances. This would increase the credibility of developers and would protect consumer rights as well.

Dharmesh Jain, President, Confederation of Real Estate Developers' Associations of India -- Maharashtra Chamber of Housing Industry (CREDAI-MCHI), told IANS that RERA "will help in bringing in higher transparency and will help the customer to get possession in time. Also, one will know what they are paying for and would be sure they will get what they are promised. In fact, the developers will have to be accountable on the dates and timelines shared".

Additionally, buyers and developers will now finally be on a level playing field with respect to penalties on delays. Both parties will now pay the same rate of interest in case the buyer delays payment or the developer delays giving possession.

"RERA is a long-term policy measure whose effect will be pretty permanent, in the sense that it will drive unscrupulous or unorganised developers off the market and leave a level playing field for credible players in its wake," Ramesh Nair, CEO and Country Head of leading property consultant JLL India, told IANS.

"We are now seeing evidence of a gradual revival on the back of pro-consumer measures like RERA coming in, decisive court actions against errant developers, price corrections and renewed confidence in the economy," he said.

Shubika Bilkha, Business Head, Real Estate Management Institute (REMI), told IANS, "These initiatives will contribute to organising this sector that has been traditionally fragmented and unorganised, while improving consumer confidence.

Modern times have erased royalty as a social class, though the fundamental concept of royalty lives on in the form of extremely high purchasing power.

The history of mankind has been replete with instances of magnificent architecture, and this trend has - both in the past and today - segued almost naturally into home designing concepts. In years gone by, imposing architecture was a function of both aesthetics and need - for instance, forts and palaces had to be massive to the point of being impregnable. Merely the scale this called for was impressive in its own right - and with such large canvasses, the scope for artistic embellishments was literally unlimited. Of course, the chance of everything getting cannon-balled to smithereens was a bit of a downside.

Understandably, the richest people of our ancient cities sought to ape the opulence and grandeur that their kings and queens enjoyed in their imposing abodes. They also needed to express their relative cultural superiority and the fact that they were patrons of the fine arts - at all times an expensive persuasion. They built homes with which they intended to simultaneously reflect their cultural refinement and financial clout.

Modern times have erased royalty as a social class, though the fundamental concept of royalty lives on in the form of extremely high purchasing power. Nobody is building the classic palaces of bygone centuries anymore, because there is no longer any need for them and the whole idea of palaces itself has become more than a little distasteful. However, deep pockets continue to invest in luxurious architecture, for more or less the same time-honoured reasons.

The richest still build palatial homes with their own gardens and estates; however, there is a distinct limitation on that format in modern cities where the heartbeat of economic activity that feeds wealth-creation is strongest.

Here, luxury apartment buildings and villa / bungalow projects must serve the purposes that the palaces of yesteryears did - that of exuding the class and artistic temperament that wealth is expected to bring with it. Luxury housing has made a decisive comeback in India - a country whose historic architectural marvels have already set a very high standard. More and more people can afford to buy ultra-luxurious homes where one of the differentiating factors is impressive, opulent architecture.

Palaces may be a thing of the past, but recreating the same ambience in the exteriors and interiors of modern city apartment projects is very much 'in'. The concept of luxurious architecture may at times reflect a bygone age or even the historic ethos of another country, but it must also be coupled with ultra-modern amenities and latest technological advancements. Functionality and design must blend seamlessly, and the challenge to achieve this is keeping developers and architects of luxury abodes very busy indeed.

Here, artistic ability and expression still play a major role. For instance, simple Italian marble is no longer considered a luxury - however, it can be crafted in ways that make all the difference. Based on the target clientele of buyers, interior and exterior architecture can be designed to cater to different tastes. It is possible to replicate the grand Mughal style or bring a touch of ancient Rome or Greece to the interiors and exteriors to modern luxury homes.

Of course, nothing in this genre of homes is complete anymore without high-tech security features, massive spaces, a high-value address. However, it is the architecture that causes the first sharp intake of breath - that sense of wonder and awe which woos potential buyers.

All good? Well, not entirely.

The Downside of Architecture as a USP

Buying a home with stunning architecture is a dream and a moment of pride, but it also comes with certain disadvantages:

One pays a much higher cost to buy such a luxury property, given the extra investment and effort put in by the developers to create something of such scale and magnificence. The cost is invariably higher than most other regular luxurious housing projects in the same vicinity.

It is not easy - or cheap - to maintain such homes. They require extra efforts and resources to ensure the ambience endures and the high levels of functionality do not erode.

If more than two generations are living under the same roof, catering to individual tastes becomes difficult. What feels novel at the time of purchase may become an irritant over time.

Human tastes change, and one particular style of interiors can only be appealing for a specific period of time after which one wants a change. It becomes extremely expensive and in some cases almost impossible to change the entire architecture of a residence, especially in the case of apartments in a high-rise. In such cases, changing the exteriors is out of the question and making internal changes usually also calls for intense structural audits and municipal permissions.

Despite such limitations, imaginative and tastefully executed architecture is and will remain a major selling point when it comes to super-luxury and even affordable luxury housing. This trend is not going to go away in a hurry.

Global investors keener now to invest in Indian real estate : Christian Ulbrich

International investors are keen to invest in Indian real estate now more than ever before due to the enhanced liquidity and transparency it offers, a top global real estate expert said.

“The outside view is more positive than the inside view on what I hear from Indian entrepreneurs, who are much more critical about the situation here,” Christian Ulbrich, Global CEO & President, Jones Lang LaSalle Inc., the global real estate consulting firm, said in an interview. “But the outside view is incredibly positive for India,” he said.

Global investors want India to be successful so that it can develop into a matured country providing greater investment opportunities and options for investment, he said.

“There is strong hope that India will be successful because people are now positive with the current government. People believe that he is starting to have real success in what he is doing and India is now catching up [with] China because there was a long period when India was disappointing for international investors.”

He said India is now catching up in transparency which is a good indicator. In the JLL transparency index, India had moved up from 48 four years earlier to 36 in the latest survey among 110 countries. Liquidity is becoming much bigger due to the presence of institutional money mainly of sovereign wealth funds and Pension Funds, he said.

Demonetisation positive

He added that demonetisation was a big, positive development for India. “I can’t judge how it was executed. But the concept behind it is well received internationally. Because corruption is clearly the biggest evil for any country… and institutional investors have received it well.”

Mr. Ulbrich said globally there was strong and increased allocation into real estate so there was much more capital chasing limited products.

“Clearly, institutional investors like to buy top quality buildings. So, there is more money coming into the sector. Institutional investors would like to buy those buildings in markets which are very transparent, which are very liquid and which have a strong rule of law. At the end of the day, they are talking about relatively small number of countries which are taking the bulk of the investment in real estate. This is very important for India,” he said.

He said when there is comparison between China and India, people still look at India in a positive way because it is a democracy where there is rule of law.

Ramesh Nair, CEO & country head, India, JLL Property Consultants (India) said though the December quarter was the worst ever in 30 quarters, still, real estate price on an average rose by 1.2% in 2016 as compared with 3.2% in 2015.

“Contrary to the general perception that the real estate market is crashing and prices dropped 30% after demonetisation, prices across the board in fact went up 1.2%.”

However, he said the sector was heading for consolidation as profit margins were declining rapidly and most developers lacked depth.